Submitted By: someone
Answered: June 1, 2022 2:45 am

I received a wrongful death settlement following the death of my relative. Is this taxable to me or to her estate?

A wrongful death settlement of compensatory damages is nontaxable because it is the result of a claim arising from personal physical injury or illness. However, if the settlement includes punitive damages and/or interest, that portion of the settlement is taxable.

Tax Glossary

Deferred compensation

A portion of earnings withheld by an employer or put into a retirement plan for distribution to the employee at a later date. If certain legal requirements are met, the deferred amount is not taxable until actually paid, for example, after retirement.

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